Accounts Receivable and Allowance for Credit Losses

6 Months Ended

Aug. 31, 2024

Receivables [Abstract]

Accounts Receivable and Allowance for Credit Losses

4. Accounts Receivable and Allowance for Credit Losses

Accounts receivable are reduced by an allowance for an estimate of amounts that are uncollectible. Substantially all of the Company’s receivables are due from customers in North America. The Company extends credit to its customers based upon its evaluation of the following factors: (i) the customer’s financial condition, (ii) the amount of credit the customer requests, and (iii) the customer’s actual payment history (which includes disputed invoice resolution). The Company does not typically require its customers to post a deposit or supply collateral. The Company’s allowance for credit losses is based on an analysis that estimates the amount of its total customer receivable balance that is not collectible. This analysis includes assessing a default probability to customers’ receivable balances, which is influenced by several factors including (i) current market conditions, (ii) periodic review of customer credit worthiness, and (iii) review of customer receivable aging and payment trends.

The Company writes off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance in the period the payment is received. Credit losses from continuing operations have consistently been within management’s expectations.

The following table presents the activity in the Company’s allowance for credit losses (in thousands):

	Three months ended		Six months ended
	August 31,		August 31,
	2024	2023	2024	2023
Balance at beginning of period	$1,720	$1,819	$1,707	$1,709
Bad debt expense, net of recoveries	67	100	177	235
Accounts written off	(11)	(53)	(108)	(78)
Balance at end of period	$1,776	$1,866	$1,776	$1,866

The following table summarizes the components of accounts receivable as of the dates indicated (in thousands):

	August 31,	February 29,
	2024	2024
Trade receivables, net of allowance for credit losses	$37,109	$39,665
Vendor rebates	2,142	3,109
Notes receivable	4,405	4,435
Other	73	-
	$43,729	$47,209

The note receivable related to the sale of an unused manufacturing facility and was structured to be paid in 12 consecutive monthly installments, with a fixed interest rate of 5.95% per annum and a balloon payment due upon completion of the final payment. By mutual agreement, the note receivable has been extended beyond the one-year maturity date due to regulatory delays in clearing the facility for third-party financing. The note receivable is classified as current as the Company believes the regulatory delays will be resolved in the next twelve months.